Grant's future has been under debate almost from the moment he inherited the Stamford Bridge reins from Jose Mourinho and his eight-month tenure is now at an end just three days after his side lost to Manchester United in the final of the Champions League.
A statement on the club's official website read: "Chelsea Football Club can confirm that Avram Grant has had his contract as manager terminated today. This follows meetings over the last two days.
"Everybody at Chelsea FC would like to thank Avram for his contribution since taking over as manager last September.
"We will now be concentrating all our efforts on identifying a new manager for Chelsea and there will be no further comment until that appointment is made."
The futures of Chelsea assistants Steve Clarke and Henk Ten Cate are unclear, but no official word has yet been given on their positions.
The likes of Barcelona's Frank Rijkaard, Inter coach Roberto Mancini and Russia's Dutch boss Guus Hiddink have all been linked with the job in recent weeks and any such appointment would be expected to bring their own staff.